Local legislator hopes to end abuse of property tax exemption in 2014 session
Date posted: January 20, 2014
SHERIDAN — As the Wyoming Legislature prepares for its 2014 session, the docket of bills to be discussed continues to grow. Currently, there are 106 bills proposed for consideration
The Sheridan Press caught up with Rep. Mike Madden, R-Buffalo, at last week’s legislative forum to discuss the bills that emerged from the interim Joint Revenue Committee over 2013.
Madden is chairman of the House Revenue Committee and said the committee will bring three bills to the session.
One bill is the result of misuse of property tax exemption status by charitable organizations — a problem that is centered primarily in Teton County but that is creeping into Sheridan County.
The committee heard testimony that a wealthy individual or entity would buy a 700-acre parcel in Teton County and build a mansion on a few acres in the middle of the parcel. They would then put the remaining 696 acres into a charitable trust — under the somewhat obscure ‘Secret, Benevolent and Charitable Organization’ classification — so that most of their land would be exempt from taxation, Madden said.
Someone also testified that a wealthy individual set up a charitable trust for a college in Chile to avoid paying property taxes in Teton County.
“Now, if you’re going to be a charitable organization, it has to accrue benefits to Wyoming citizens and it has to be meaningful or substantial,” Madden said.
You can’t just pass a $5 bill to them. It has to be commensurate with the value of the charitable organization,” Madden said.
While the problem is greatest in Teton County, Madden said it is spreading over the state.
“We did hear that it’s starting in other counties, and they specifically mentioned this county (Sheridan County) as having the beginnings of that kind of thing, but it isn’t nearly at the level as it is in Teton County, and it never will be now with this law if it passes,” Madden said.
Madden said legitimate charitable and nonprofit organizations, like churches, will not be affected by the bill.
A second bill that will begin in the Senate also deals with property taxes. It will formalize the hearing processes for people who appeal their property tax bills to county commissioners who form the County Board of Equalization.
Madden said appeals of property tax bills vary by county and by year. An inflationary period, a new assessor who does things differently or an unexpected re-evaluation that results in a perceived overvaluing of property can lead a property owner to appeal his or her bill.
“What we found is that every county seemed like they were doing their appeal processes differently, which means we have a problem in equal protection under the law if people are being treated different in one county as opposed to another,” Madden said.
“For example, one remedy at the county level is if they can’t come to some kind of resolution at the local level, they can send it to the State Board of Equalization. There were some counties that were entirely too liberal with that,” Madden continued. “They would just, almost like a rubber stamp, anyone who came in to appeal their taxes somebody would make a motion on the county board and say, ‘I move we forward this to the state.’ It was just a deal where that level of appeal was essentially bypassed, and that wasn’t right because other counties had more of a thoughtful way of doing it at the local level.”
The new law will re-write policy to make it clearer to understand and make procedures equal across all counties.
A third bill proposed by the Revenue Committee will change the interest penalty on audit settlements that show an energy company underpaid on severance taxes from 18 percent to 12 percent. He said that will equal the interest penalty charged by counties for underpayment on property taxes.
Madden said people who don’t like energy companies will think the bill gives them a break, but it doesn’t. They will still owe an 18 percent interest penalty if they are late with their taxes or refuse to pay.
“The difference with audit settlements is that they didn’t know that they owed the money. They sent a check in, but the check was 10 percent too small. It wasn’t a deliberate negligence on their part. It was just an honest mistake or they didn’t interpret a new law like we’re interpreting it. They’re close calls, in other words, and often times they’re settled in court. They’re not a black and white case,” Madden said.
“So the question is, in the cases that aren’t included within the could have known or should have known category, should they really be assessed as severe a penalty as if they didn’t write the check at all?”
Madden said if he brings any individual bills he will bring one that will simplify the reporting requirements for school districts.
“Every time I go visit a school district, I get hammered with all the reports and data they have to present. The question they have is whether the data is even ever used,” Madden said. “I just want to have an audit of all the reports we require, what kind of duplications in those reports exists and which one of these reports that we now enforce can be repealed.”
However, Madden said he prefers not to bring individual bills during budget sessions because they can distract from what really needs to be discussed in the short, 20-day session.